>> for the news of china, japan and south korea. everything from trade is on the agenda. we will take you there live very shortly. boeing drops its pilot. david calhoun will replace as the new ceo. and bmw sales pro. the german automaker is being investigated months after fiat chrysler paid a penalty for a similar issue. ♪ >> good morning and welcome, i'm

guy johnson in london. let's get the first word news. >> china is on a mission to create an aircraft carrier-sized investment bank. they are opening up $45 trillion financial industry would also wants to beef up its own players to go toe to tell giants. at the moment china's brokers don't have much of an international presence. adding together the 131 brokers have about as many assets as goldman sachs by itself. germany expects the nord stream 2 two gas pipeline to be delayed but it should be completed in the second half of next year. costs are rising after sanctions -- u.s. sanctions on the project. of japan and south korea are holding their first formal meeting in 15 months amid a long-standing historical dispute that hit trade in the region. it also had a trilateral meeting

between the three. they've reached international cooperation on dealing with north korea. 2019 has been a good year for the superrich. almostrichest man added $17 billion to his wealth this year. over $11 billion. , bernard,nner of 2019 his net worth growing, but it was not all smooth sailing. jeff bezos losing more than $13 billion. global news 24 hours a day on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. guy: the japanese prime minister is holding a news conference following a trilateral meeting the chinese premier and south korean president. it's taking place in china.

dating back more than seven decades, a spotlight as the legacy of japan's colonial rule continues to affect relations between the neighbors. tradere locked in their war, their own trade war which continues to be problematic and another element of this deglobalization story we've been monitoring so closely draw 2019. joining us from beijing. john, what are the main takeaways, what do we need to know? >> not a great deal, both expressed to each other they understand both sides have different opinions about the issue, they both have a -- they both have affirmed they need more dialogue, they've underlined the importance of the bilateral relationship. we weren't expecting them to come out and say we solved anything. they haven't done that yet. guy: in terms of the main issues they are discussing.

everything from north korea on the table there to trade, any signs that any of these issues are going to deliver any kind of resolution? where are we on these major sticking points? >> those are both long-term issues that are going to take months if not years to solve. north korea is probably the most pressing given the more provocative actions they have taken in the recent past. trade is obviously important, talks are happening in china. china is obviously involved in this trade dispute with the u.s. but also their own between japan and south korea. japan and south korea are both among the three biggest trading partners for one another. of globalhe backdrop trade, it's not easy to get over. the tradings of relationships, to what extent -- japan and south korea are both

very close allies of the united states, clearly there is a cultural dispute that goes along way between the two. from a positioning point of view they start from the same page when it comes to china. is that evident here, are these two countries more allies when it comes to the relationship with china? are they taking a similar line when it comes to hong kong? importance of the u.s. relationships with both countries basically puts a floor on this dispute. we've seen today it's been 15 months since they held talks now they are coming back together. they have affirmed the need to have greater dialogue and how important each is to the other. threatorea and that underlines the issue. china i think would like to see its influence in the region grow in the u.s. as a counterbalance

is also very important to north korea -- to korea and japan. seen a cash injection. with the details about that. said theemier has chinese government is ready to lower the reserve requirements of banks and hopefully increase lending to the private sector. china has been trying to rein in the shadow banking industry in the country. especially to private businesses in the country. -- trade war has obviously is obviously having another negative impact on the ability of these businesses to earn a profit and their margins are being squeezed as well. so i would expect this is probably the first of many steps the government here will take to try and ease that pressure. guy: thanks for your time. joining us now here in the studio, bank headed affect

strategy. responded has positively to this. the story going into 2020 as there is still much work to do. relations that are taking place in asia, a trade war taking market stillis the buoyant at the moment? a little bitll over its skis? the first is probably yes if you look at the fundamentals. if you look at the comments made by one of the u.s. security advisors, he was really very hawkish, he was very critical of the u.k. on potentially including the chinese company in there 5g network. he is very hawkish. if you take just that, it's difficult to see a significant fall in the relationship between the u.s. and china. if again you look at the fact

there was a phase one trade talk. why was it necessary to have phase one when trump initially wanted -- guy: it implies a phase two. can it actually pass a phase two? is it possible to get through the hurdles to implement phase one. if you look at it like that, to me it seems a most inevitable we would have more relations between the u.s. and china. and yet if you look -- if you go 2019,nd you look through investors sort of got it wrong in terms of the buoyancy of the stock market. they did not anticipate yields were turned negative as they did. that keeps coming back. there was a huge amount of savings out there and it seems almost irrespective of the ,avalcade of back -- bad news

asset prices are a destined to do better than that fundamental -- fundamental suggest they should do. because this huge amount of money has to find some home. i think there was that and the possibility you have had the federal reserve cutting interest rates as well as many other central banks and that has provided for sort of sticking plaster over the bad news. it's reduced volatility, it's and it's quite possible again if you did have some certain increase in tensions between the u.s. and china that the fed can cut interest rates again, perhaps give a bit of leverage back to trump and that would perhaps divert some of the attention of some of these bad fundamentals which we could talk about for hours and hours and perhaps provide some comfort. to thet's go back difference between reality and asset prices.

which is driven by the savings. case, yields are gonna be depressed. if you are looking for income, you will struggle. see you are looking for capital appreciation basically, it points when the only direction. yields can probably go lower and prices can go higher but if you're looking to cap appreciation, where do i get the biggest bang for my buck? jane: in equities. if you look at the surveys out in 2019 for investors in the equity market bring even the most bullish didn't really anticipate we would be where we are. amountgot to do with the that are out there. we can go back to some of bernanke's essays about savings glut and then we can go perhaps as -- to asia as well. we had the governor talking about asia and he was talking

about many asian countries you don't have a social security system. people need to save. talking what a huge amount of growth in many countries since the start of the century. guy: you either have a pool of money or you have a personal savings pot. they are the same thing. >> they are looking for a home. again we could talk about a lot of the bad news out there and yet in a way i think there is a shift because of this huge amount of money still needs to find a home. guy: bit of breaking news coming through. kuwaitis's and the have signed a deal on a very small strip of land known as the neutral zone. a strip of land which has been disputed as a result of which no oil has been produced in the area. fivecapable of producing

under thousand barrels a day. this plays into the kind of wider story of the fact that we continue to see quite a lot of oil in the market. we will talk about that later on in the program. let's stay with surveillance and talk more about what's coming up. coming up we have boeing, boeing, gone. the american plane maker ousting their ceo. up. calhoun will step can he restore confidence in the 737 max and fix the relationship of the faa? u.s. regulators are looking at bmw and the way it's been reporting its sales. we will come back to that later on and take it to berlin for details. this is bloomberg. ♪ ♪

guy: this is bloomberg surveillance. i'm guy johnson in london. let's get to the bloomberg business flash. >> to address u.s. concerns considering selling a majority stake in tictoc. washington is worried the -- tik tok. selling more than half the business could raise over $10 billion. the u.s. secure is an exchange commission to put bmw under his microscope. this comes months after the regulator find fiat chrysler $40 million over similar issues. it comes as the german carmaker is in a tight race for leadership in the u.s. luxury auto market bmw says it will cooperate fully with the investigation. boeing hopes in new ceo will restore confidence in the company and fix its relationship with a range of stakeholders

from investors, customers, public crucially the faa regulators and lawmakers. it comes as boeing disclosed a new batch of internal messages. it's a second time they've turned over documents related to the grounded 737 max. that's your bloomberg business flash. guy: thank you very much. , the just been hearing embattled playmaker naming chairman dave calhoun as president and ceo. calhoun recently took over as chairman. the board decided the change was necessary to restore confidence in the company. -- latest twist in the sale in this surrounding the 737 max. benedict joins us now from berlin. why is dave calhoun the right person? i'm really curious? atis a ge guy, he came in bowing, he's only recently come into the company. talk to me about why -- what he

is going to deliver for boeing, what job number one is. >> job number one for david calhoun is to stop the bleeding quite simply. this is a company where everything's been turned upside down with a 737 grounding. this is a plane that traditionally brings in the bulk of the money and right now it is bleeding cash like crazy for boeing. really what calhoun needs to do is stop the bleeding, stabilize the company and then crucially try to repair relations with stakeholders. or quite unhappy with how this crisis has unfolded who were unhappy quite withtly publicly so dennis, putting pressure as they felt on the regulators to get the plane certified they had back in the skies. and obviously a supplier base who are unhappy about the production halt.

the flying public who are squeamish about the 737 max on the ground, will they board that kind of plain again or why they have to rethink fundamentally what future that plane holds. the victims of the people who have perished in these two crashes. all these different stakeholders and all of them deeply unhappy with how boeing has handled the crisis so far. lots for david calhoun to address here. i see he the right man? is a fresh face, he came in in october. he is untainted by the crisis, but he is also somebody with a very deep network into corporate america. he has that ge background which is interesting. boeing seems to like ge people. they have leaned on ge people and brought them in the past when they have fired other ceos or given them sort of an encouraging knowledge to get them out. he sort of fit that bill and he

knew. that's crucially what they want right now. >> my question is is he going to be around for that long? is he just here to fix the problem with the max or do you think he will go on and try to resolve some other issues boeing faces right now. they have got to make a decision on the nma which is basically the aircraft which is likely to replace the 757 and compete with the long-range version of the a320 family. and then this huge cultural issue that needs to be dealt with at boeing. do you think dave is a guy who will be there trying to fix those issues or do you think you will basically come in, deal with the max problem, find a successor and then let that successor deal with those problems? >> and you haven't even mentioned the space probe last week. issuesally long list of and the 737 always the absolute

priority. that's the plane they have to fix in the program they have to fix. after that, many other issues and airbus breathing down their neck. selling like crazy right now. this still is a duopoly between these companies and with airbus doing so well right now, that's another huge issue. will he stick around? probably depends on the tone he will strike. he is still at an age where he could stick around for longer and try to stabilize the ship. it would be weird i would on the safer boeing to sort of having here for a couple of months and then switch to somebody else. i could well imagine him sticking around a little longer and then sort of handing over for long-term succession he is probably not going to be there for a couple -- guy: what's the problem with bmw? >> for bmw the question is when

is a car consider sellable in our -- sellable or not. they had them to use as replacements and loaner cars and mark them sold. that something they are looking at saying is that really a sold car or not. probably not the christmas gift they were hoping for from the sec. fiat chrysler had a similar issue. if they can get away with that. guy: benedict, always a pleasure. our global business editor joining us out of berlin. later in the program we will talk about what's happening with sterling. a pounding headache. we will discuss that later in the program, this is bloomberg. ♪

guy: you are watching bloomberg surveillance. let's get back to the oil markets. we've been waiting for this news. the saudi's in kuwaitis have finally -- and kuwaitis have signed a deal on the neutral on in thend that goes persian gulf. it's a disputed piece of land capable of producing around 500,000 barrels a day. it has been inactive for a while. which we will see that production coming back online. markets closed today. -- severalt several markets shot.

markets closing early in the u.k. and france and spain as well as the united states. markets, christmas day, closed -- the u.s. will be open. the restless will enjoy boxing day in the day off. friday we are back in business. suspect, volumes will be very light in london today. down by 70%. theext we are talking about pound. this is bloomberg. ♪ s bloomberg. ♪ what are you doing back there, junior?

since we're obviously lost, i'm rescheduling my xfinity customer service appointment. ah, relax. i got this. which gps are you using anyway? a little something called instinct. been using it for years. yeah, that's what i'm afraid of. he knows exactly where we're going. my whole body is a compass. oh boy...

the my account app makes today's xfinity customer service simple, easy, awesome. not my thing. guy: selling underway. the leadership of china, japan, , with northrea

korea on the agenda. boeing dropped its pilot. ceo -- can he get the max back in the air? paying the penalty for similar issues. this is "bloomberg surveillance ." i'm guy johnson, in for francine lacqua. let's get to first word news. breaking news, saudi arabia, kuwait signing a pass on the neutral zone. the area can produce as much as 500,000 barrels a day. the neutral zone has been shut for more than four years because of the dispute over oil concessions. the fed may be doing more to calm the repo markets in pumping billions of dollars into the system. since mid-september, the amount outstanding in its foreign

reserve for shrinking 18%. that is where others have told banks can park their cash. it may reflect a shift in foreign and central-bank behavior, or it may be a stout policy step. in 2019, it was a good year for the superrich. almostrichest man adding $17 billion to his wealth this year. adding $11 billion the biggestname -- winner in 2019, his growth of $36 billion. andas all not rainbows unicorns. jeff bezos lost $13 billion. global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in i'm than 120 countries, viviana hurtado. this is bloomberg. guy? guy: thank you very much indeed. let's talk about the fed. i will set it up so where we go in 2020.

eric rosenberg thinks the u.s. economy is doing fine, but he is concerned that the central bank has been unnecessarily accommodating with this week's rate cuts. he said that with mike mckee on november 18. not quite so sure we need so much accommodation at this time, so i am worried that we have less room than we otherwise would have. i would say it is not just the short end of the markets or the long end of the market. it is fluctuating between 1.5% and 2%. that is lower than what we experienced in the last recession, which means quantitative easing will have a limited effect as we get down to zero more quickly than we are expecting. guy: that was rosengren back in november, november 18. since then, the fed is facing signals it is on hold right now, watching data. it is feeling good about the where the u.s. economy is. that is the message we are getting from jay powell.

think the fed and certainly rosengren have got it wrong. go back perhaps to the end of 2018 and we look at where the market was, around this time last year, the market was beginning to change its view because in 2018, the fed was hiking, which we -- the fed was hiking, the market was thinking it is 2019, there will be hikes as well. around this time last year, the market began to think maybe not. guy: the market nosedived at that point. jane: instead, we got the fed cutting interest rates. this was a swift change in the policy view over the course of six weeks or so when the market really went from anticipating hikes to anticipating cuts. the fed is indicating it is happy where it is. perhaps next there will be a hike. but we still think the next move will be a cut. there are interesting ways of looking at this.

one of these ways is perhaps through trade. you can be skeptical about this if you would like, but you could argue that by cutting interest rates, being prepared to cut interest rates this year, if you like, the fed has handed trump the ability to be more hawkish against china on trade. because the impact of the u.s. agricultural sector and the manufacturing sector, that has been hit in the u.s. as well. that has been softened by the fed's cutting interest rates. we are of the view that there more tensions between the u.s. and china. it is inevitable. from that point of view, you could argue if there is, the the fed isa cut from also on the table. we are fairly bearish about the u.s. economy. we think there is a risk of recession. there suspicious about

further tensions between the u.s. and china, and we think the said will be cutting. guy: your slightly underplaying that. you have the fed cutting to zero. at zero, is that number negative? jane: it certainly could be. guy: we could have negative rates in the bond market? jane: another interesting part of the story is what happens to the dollar because if you look at a textbook and you look at that scenario, surely you know the dollar is going to go negative. this is what the market should have learned during the course of 2019. years ago when the market was becoming dovish on the fed, the market was also saying the dollar has to go down, too. and it did not. the question, if the federal reserve's cutting interest rates, if we have more trade tensions, what will happen to the rest of the global economy?

what is christine lagarde doing in this world the the discountrther rates -- from that point of view, there is, again, the risk that the dollar may give back some ground. is germany in recession at that point? crisis in germany of sufficient magnitude? with that sin the euro higher? jane: that is the question everyone wants to know the , and germany has been reticent. it has not just been building in germany. when you look at australia, sweden, a number of other countries where there is pressure building for more fiscal loosening, that is going to be a significant topic for 2020. it could obviously bring some

respite to central banks. we have this big debate at the moment about -- up ifith the u.s. go germany started spending money? jane: possibly. it depends on where the data is, but certainly that could give a boost that it definitely needs. guy: jane foley from rabobank. as we head into 2020, what are the biggest risks to the global economy? hank paulson says any future financial crisis should not have its origins in the united states. we will find out why next. this is bloomberg. ♪

guy: good morning, you are watching "bloomberg surveillance

." i'm guy johnson. as we head into 2020? what are the biggest risks to the global economy? hank paulson says any future financial crisis is less likely to have origins in the united states. he said that to david rubenstein in october. verge of was on the going bankrupt, and you did not have the authority to save lehman. in hindsight, is there anything you could have done differently with respect to lehman? >> i tell you, i don't think there was. we tried everything we could to get a buyer. lehman was a bigger problem even at bear stearns -- even than bear stearns because there was a big insolvent, capital as a whole. alone thato way that was going to solve the problem. capital or a loan guarantee. systemmately the banking

came back and the financial system came back. as you look at the system today, could something like that happen again? with the legislation we have come are we better able to protect against something like that? >> first of all, the banks are battle capitalized -- are better capitalized. it is less likely to start in the u.s. there is less dry tinder to start a fire. i hate to say this, but we have less authorities today than we had then. we hadber one problem then, by far, was we had a financial system that had outgrown a regulatory system. our regulatory system and authorities had been put in place after the great depression when there was a run on banks. we had a situation where 60% of credit was flowing outside the banking system. guy: hank paulson in october talking to david rubenstein on "the david rubenstein show." let's get to the business flash.

viviana: bmw is being scrutinized by the securities and exchange position over sales practices. comes as the german carmaker is in a tight race with daimlerchrysler for leadership in the u.s. luxury auto market. bmw says it will cooperate fully with the investigation. -- the automaker secured 1.4 billion dollars in financing for its shanghai factory. the deal with local chinese banks comes as it prepares to begin deliveries of chinese made threes. boeing hopes the new ceo will restore confidence in the company and fix its relationship with a range of stakeholders including investors, customers, the public, and the faa and d.c. lawmakers. it comes as boeing finally handed over to fig federal

regulators information on the rounded 737 max. they document concerns about the flight system. that is the bloomberg business flash. guy: thank you very much indeed. as themuilenburg ousted chief executive at boeing. is the shakeup enough to restore the confidence in the firm? here with the details of this mooring's because, dani burger. -- with this morning's cause, dani burger. dani: the hope is that it will restore confidence. it is not clear what the new ceo will be doing, but one of the things on the agenda will be a cleaning of the financial deck. all things considered, a big positive for the company. one take is that it was very odd to do this in the middle of a crisis, usually at the end when turmoil is settling, the dust has settled, is when it happens.

investors may have an unrealistic expectation of what might be done. jeffries that is en, sayingre like cowa there was a necessary change to restore confidence. guy: a bunch of people from boeing yesterday, many of them are either working from home or on leave. thank you very much, dani burger, with the morning calls on boeing. let's get back to some of the news we are getting from the cruise market right now. -- the crude market right now saudi, kuwait, saying -- signing an mou on a strip of land in the neutral zone, a crucial piece of real estate in the gulf capable of producing 500,000 barrels a day, more oil coming over the market next year as a result of the deal that will finally be signed. we will come back and talk more

about what is happening with the pound and we will address what is happening in the crude market and the outlook for 2020. this is bloomberg. ♪

guy: economics, finance, and a bit of politics. this is bloomberg surveillance and i am guy johnson. the pound goes up. ever since then, it has gone down. the market seems to be pricing in a no deal brexit, a cliff edge toward the back end of this year. where does it go next? well, it is now under its 50-day moving average. there are other forces at work here. jane foley of rabobank is still with us. 1.30 at theat table. 2020? jane: it depends on trade talks. i think we saw in the election -- guy: i'm sorry, which trade talks? jane: the e.u.-u.k. trade talks. before the election there was a mistaken belief that johnson

might get a majority, uncertainty would go away, and the pound would go up. but the reality is that exit uncertainty, fiscal uncertainty will be very much an element through 2020. we have different and diverging views. there is the view that you ate -- u.k. trade talks -- the messages we are getting from the u.k. and the e.u. are very different, and that means that there is the possibility we might get a no deal brexit at the end of 2020. that is perhaps a bit of a shock to investors who thought that we will get through and they thought that that meant there would be a brexit deal. but if it was a trade deal -- but the trade deal is still not certain. as the markets anticipate that there still could be a no deal brexit, that will weigh on confidence. it could potentially weigh on the economy, potentially increase the possibility of a rate cut. guy: is there a cut this year?

jane: in 2020, it could go twice. if political uncertainty persists, does that way on investor confidence and consumer confidence? there is the risk of a cut by the bank of england and that increases. guy: you have the fed going to zero. does that mean the bank of england is above the fed in terms of where interest-rate slide? theoretically yes? where is the ecb in this scenario? jane: i think they will cut rates as well. .2 basis points. guy: more qe goes with that. jane: possibility, yes. this scenario assumes that there will be a worsening relationship with the u.s. and china. and we are moving away from the relief scenario from market expectations in the last couple of months. guy: is the bottom end of the

range for the fed and the bank of england zero? jane: i don't think the bottom end of the bank of england is zero. we could go back to comments we have heard in the past that business models are building, etc., and there is the possibility to allow those companies to make profits. i think it is probably above zero. guy: so the banks are clearly out of ammunition. jane: it is getting there. in the last couple of months in the rba in australia, their at .25 onprobably rates. higher? is the fed -- sorry, why is the fed lower? jane: it comes to banking models and different factors. but certainly in the australian and the u.k. business models, probably just above zero. but that is still -- theset will be tough for

banks. jane: it could be a tough year. the upside would be if relations between the u.s. and china improved. that is something that we just do not see at this point in time. of where this leaves us, i'm just kind of curious as to how you see this unfolding. is the weapon of choice still tariffs on the trade war? or could it be more currency orientated? often reference to currency. economy were to suffer another significant blow, it is likely that the renminbi would depreciate. that sentence shockwaves throughout -- that sends out shockwaves. that is certainly a potential

threat out there as well. trump would like a weaker dollar. the dollar may weaken. but i don't think the dollar will be a weak currency, not when it is the only dominant currency in the payroll system. continuedhere are tensions between the u.s. and china. guy: thank you, jane foley. we greatly appreciate it. jane foley joining us from rabobank, where she is head of fx strategies. saudi arabia and kuwait signing a pact on the neutral zone, the strip of land between the two countries with oil fields producing as much as 500,000 barrels a day. stuart wallace joins us now. how does this change the calculation when it comes to oil next year? >> not at all, in the sense that -- it is kind of interesting. bear in mind that this notion

that suddenly we are going to get half a million more barrels next year is not going to happen. it seems unlikely. the second important thing here, and this is the key point for me. these talks have been going on forever. a series ofen somewhat disastrous diplomatic missions to resolve this dispute. one of which ended after a couple of hours, which was originally scheduled for a couple days. that went well. the attacks that we saw back in september on the saudi infrastructure and then on shipping before that and the pipelines before that, all of that concentrated mines in saudi arabia. guy: so this is capacity redundancy. stuart: yes, and we got a tax earlier on the year which was relatively low year. and then the most devastating disruption to oil that the world has ever seen. context thatthe

saudi arabia managed to recover impressively fast, but it is not to be underestimated. in the saudis learned a lesson from that. we cannot have all this capacity sitting in one place. we need other options. there are a half million barrels over there -- guy: how capable are the fields there? stuart: very. they were operating up until a couple of years ago. guy: the pipelines are there? stuart: yes. it does not happen overnight. there is no on-off switch. it is an incredibly difficult question, but it is entirely feasible. guy: let's take the pressure off a little bit. what is this doing in terms of trajectory? the average being 63.5 as far as i can tell. is that kind of what you are looking at next year? stuart: 60 to 70 seems like the

right number. we base that on two things. it is slightly below what saudi arabia needs to break even, but not a regional sleep -- but not egregiously so. it seems to hit about the right number, but what we cannot control is the global economy. guy: stuart wallace, thank you very much indeed. "bloomberg surveillance" continues in the next hour with tom keene and anna edwards. and a retailnd grew -- giro. all out up next. this is bloomberg. ♪

tom: this morning, the season to ossess way the market is -- h

ho, bah, humbug. how do you get back in the bull market? beijing,, south korea, -- and calhoun, the message forward. good morning. it is "bloomberg surveillance." i'm tom keene in new york. anna edwards is festive in london as well. francine lacqua seen on bond street today. johnsonian lift to retail in the united kingdom? stuart: -- will put you in the mood of santa claus ask francine does christmas shopping. tom: michael holland will join us in the next hour. we are thrilled at that.

in new york city with our first word news, here is viviana hurtado. viviana: the leaders of japan and south korea are holding their first formal meeting in 15 months, as tom alluded to. the long-standing historical dispute that hit trade in the region. it often comes as -- at a trilateral meeting between that hindering regional cooperation on dealing with north korea. saudi arabia and kuwait finding a path on their neutral zone, paving the way to restart oil production in the border region. the area can produce as much as 500,000 barrels a day for more than four years. the neutral zone has been shut over oil concessions. 2019 has been a good year for the superrich. almostrichest man adding $17 billion to his wealth. jack ma growing his wealth by more than $11 billion. the big winner of 2019, bernard growing by net worth

$36 billion. but it was not all rainbows and unicorns for the billionaires. jeff bezos lost more than $13 billion. global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in i amthan 120 countries, viviana hurtado. this is bloomberg. tom: one data screen today, we have charts for you and wonderful conversation to get set for 2020. futures refused to go down. that is typical, volume 30% under yesterday. euro goes nowhere. oil is an interesting story. land neutrality between saudi arabia and kuwait playing in there. oil -- that's all i've got to say. i am struggling on the data. anna: i will struggle along with you on the data. i put oil in my check as well. i am glad it is not last christmas eve. remer per last christmas eve? we were down more than 2% on u.s. -- remember last christmas

eve? we were down more than 2% on u.s. stocks. trade wars, trains had -- trade tensions still lay ahead. comparison,eresting the volatility this time last year compared to -- tom: let me show a chart of the decade, a chart of our lifetime may be. this is a chart out of yale university. i am using the dow here. i can go back farther to the guadalcanal low of 1942, then a regression up. the reason i did this in this hour is to show the pullback of december of last year. we did not even get back -- nice fade in there. we did not even get back to the long-term regression, the green line. then went up we go -- then up we go to new record highs. that shows the placement of this great bull market. anna: that is the set up we saw this time last year in context. then it was the day after

christmas, of course. i have gone where the chicago said national activity index -- too busy to chart. 85 nationalure of economic indicators, and the top line is it is the highest since february of 2018. --m saying maybe refashion recession fears in 2019. let's go to a senior investment strategist in london. thank you for joining us. thank you for spending the morning with us, daniel morris. we put it to bed as they knew year roles in? daniel: we never spent much time taking of recession in the u.s. where people perhaps got confused, remember back to 2018, the third quarter fourth quarter, when growth was at a half percent, forecasts even then were growth to slow to 2.2. we knew that growth was going to slow from 3.5 to 2.2 over the

next year. more or less, that happened. other people interpreted that to ang as a move recession, which it was not. into 2020, if you are looking for gifts this time of year, any seasonal gifts, do you want to see more equities at this point, or do you want more bonds into 2020? what is your preference? daniel: there is a tactical consideration that was, given the compression in credit spreads and rallying equities, you might want to wait for a slightly better moment. but in general we still affect that expect risk assets -- should outperform developed market balance. that is the allegation that clearly was right next year -- right this year and we think it will be right next year. tom: bring up a chart, if you would. this is the same chart as before.

dan morris and i got beaten into at the cfa institute. 27 percent down from the long-term regression. , and howarket extended do i invest if i know we are extended? think thell, i problem with looking at these long-term regressions is, it is safe to say it is different this time because we are looking at a world where we have quantitative easing globally, and that change the evaluations in the market. instead of making the comparison from 10 to 20 years ago, that is where it becomes problematic. nonetheless, if we look at multiples and compare that to where earnings growth is, what we can expect over the next year or two years, it seems a bit out of balance. even if we had anticipated a decline to the long-term trend. tom: bnp paribas has been dead on on slower economic growth. what exactly is your call on the markets for next year?

given the spx and the dow confidence that you have out 12 ?onths he ech daniel: pretty confident. if we look in terms of growth, 10% in the u.s., 8% in europe, is whether or not it will be achievable. i think there is skepticism that is warranted, and you add on top of that elevated multiples in the u.s., you come up with modest expectations for total returns for developed market equities next year. you have to take that figure and compare it to what you are likely to get to treasury. it does not look so bad. tom: something we will touch on in the next hour is the idea of the nifty 50. are you concerned about the concentration in the market, and do you own those concentrated super stocks, or do you buy everything else? daniel: certainly it is a concern and it is something that people may be egg nor. even though we talk about the

contribution to s&p returns, you alibabathink about the interest in china. is in china larger relative to the margins and to the s&p. it is more of a broad phenomenon that applies to the u.s. as well as to china. whether we call them communication services or information technology stocks. also a concern, and it is a concern that even if their profits grow, is it coming at the expense of profits in the rest of the market? we have to think about that balance. is there winning coming up on the cost of other companies in the index? that is something that will be a challenge. anna: and you rate the flag around ease -- eps growth. where is that going to be hardest to achieve? is it going to be companies that are struggling to cope with tariffs and the decision to not

pass those on to consumers, and it might catch up with them? what is going to be the squeeze on earnings in early 2020? daniel: i think it will be something that we have worried about for a while, which is what happens when wages pick up? companies have pricing power to push those price increases through. not clear that they do, so they more will have to absorb wage increases in the same way that companies have to absorb the increased cost of inputs because of tariffs. it is that kind of dynamic that makes it challenging for labor sensitive sectors in the economy or in the economy or import sensitive sectors in the u.s. to generate 10% earnings growth when you have the u.s. economy growing at 2%. anna: so wages and imports. thank you very much, daniel morris, from bnp paribas. ousts the ceo. david calhoun faces the daunting task of rescuing the 737 max and the playmaker -- the plane maker

's reputation. this is bloomberg. ♪

salesa: this is open reporting practices prompting the securities and exchange commission to put bmw under its microscope. this coming months after the regulator finds the out -- finds fiat chrysler $40 million over similar issues. it comes as the german carmaker is in a tight race for daimler -- with daimler for leadership in the u.s. in the luxury market. bmw says it will cooperate with the investigation. boeing is hoping the new ceo will restore confidence in the company and fix its relationship with a host of stakeholders from investors, customers, and the

public, crucially to the faa ndc lawmakers. it comes as boeing finally handed over to federal regulators a new batch of internal messages of the now grounded 737 max. they document concerns about the flight control system implicated in the deadly plane crashes. tesla shares hitting a record high. the automaker secured $1.4 billion in financing for its shanghai factory. the deal with the local chinese bank comes as deliveries are planned for the chinese made model. that is the bloomberg business flash. tom? anna? ceo: boeing has ousted dennis muilenburg. the embattled plane maker named david calhoun as the president and ceo. the board decided to change was necessary to restore confidence in the company. the move is the latest twist in the world surrounding the grounded 737 max.

joining us now is george ferguson. good to have you on the phone with us. whate ask you, if this is they did, to restore confidence, it is the change at the top a secret for boa? morning.ood i think the change at the to is the beginning of the process. calhoun clearsid the deck and allows them to go ahead and approach the faa with a lot more of a cooperative stance. what they are trying to do is keep the max from being further delayed. goes to the faa with a much more cooperative relationship in trying to get the airplane back in the air. aim ofhat remains the the 737 max program, in restoring it. does anybody have a sense of a timeline?

george: the latest that we have heard is that the timeline is mid february. that was a big surprise to the marketplace because dennis muilenburg has been talking about the airplane being back in fleets by the end of this year, maybe early next year. so i think that was part of the reason why they ultimately decided to go to this. that is a big surprise to the market place. tom: george ferguson, thank you for joining us. softwares of discussion versus the hardware discussion of the safety of this jet. know, the bigu challenge here has been with mcas. the big question is whether this airplane's physics have gotten so far stretched that it is unsafe.

so we talked about this yesterday, like you said. where we are is that this airplane can be faithful. we do think in our analysis that it will fly in fleets for decades. it is just that when they design the mcas system, the anti-stall system, they overdid it, and a system designed to keep it out of trouble was responsible for putting pilots in trouble, overcompensating the airplane and pushing it into the ground. we do think they have that software fix in, and that is what the faa has to evaluate, and evaluate the training by pilots to get it back into feel -- into fleets. we think the big question going forward -- we think they need a new airplane going forward. this is probably the last iteration of what they can do with the 737 airframe, and they have to focus on getting their most important airplane brought into the 21st century.

tom: how long does it take to do a new airplane off the legacy of the 737? five years? george: i think so. it is hard to see something less than five years. wow. while george: with this version of the airplane, you could see new technology come out. 15 years is typically what they say for new engine technology that is worth putting on an airframe, forward. 2011 is the last time we saw this technology changed, on the max. that puts us in -- if i could do math this morning -- 2026, 2027 timeframe. i think we would be ready for a new airframe and a new engine. pressure will be on as well because there is a lot of discussion about reducing

emissions in the industry. you could see the engine makers bring forward new technology. 2020 one, you've got to be underway in a new airplane. it feels like we are almost there. anna: george, it is going to be is busy time for the new ceo, david calhoun. in terms of rebuilding the trust of stakeholders, you mentioned the aviation authority in the u.s. and a number of other stakeholders. what about confidence as a pilot , the pilot to test aircraft and employees more generally? i was looking at share prices. you can see a point where the going sharepoint drops. where there is a red flag raised by a pilot who said i did raise concerns about the 737 max during the testing period. is there a way that work needs to be done to rebuild trust between parts of the boeing operation? george: there does need to be trust restored, definitely with the pilots indefinitely with --

i think the employees may be a little confused because the company has not been as much an engineering concern lately as it has been a company that is very cashed on profits driving flow, returning cash to shareholders, and being a good investment. is definitely important, but the challenge as a ceo at boeing's you have to find a balance between those two. the new ceo has to get that message to the employee base that we are going back to solid engineering, solid execution, the kc 46, u.s. tanker has been a bit of a challenge. we had a star liner problem recently, we have the 737 max recently. there has been a number of projects that have not gone as well. the engineering has not been solid in it. the pilot base, putting a good airplane forward, gives you the pilot base. pilots are disappointed about

not understanding all of mcas. i think they are starting to repair that pilot base issue. pilots have come to simulators with the new mcas on it, they are happy with how the simulator is responding. got to get that all on the airplane. they are happy to do that. i think that will improve in time. anna: thanks for joining us, george ferguson, aerospace analyst for bloomberg. the german, swiss, and italian markets are closed today. we are not moving very fast on the european equities base. some markets are closed already. those that are open, some will be closing early. in the u.k. and france and spain, as well as the united states, will see early closures. tomorrow is christmas day with most markets around the world closed. bedecember 26, the u.s. will open as usual while others are main shut for what we call here

in the u.k. boxing day. there are many theories. friday is business as usual as we head to the end of the year. this is bloomberg. ♪

anna: i am anna edwards in london, with tom keene in new york. it is christmas eve. francine lacqua is off. i want to come to you on the subject of negative interest

rates. as we get to the end of 2019, something big has been happening recently, and that is the rex bank turning away from negative interest rates. is that a big deal for you? i think it is quite a big deal. payt of people do not attention to what the rex bank does. that's rick's banks does. the theory is that if negative rates are bad for the economy, that moving to zero is a stimulate of measure. we want to see a pickup in inflation and in growth. if that happens, perhaps it gives an opportunity for the ecb to get out essentially where they are in negative rates and move more quickly than they might otherwise. anna: so on the ecb front, perhaps, we will see if they learn anything from this. thank you very much, daniel morris of bnp paribas.

coming up, the other trade war leaders from japan from south korea and japan -- and china. moon jae-in says he wants shinzo abe to reverse export controls. we will give an update for you. talking a lot in 2019 about trade tensions between the united states and china. other trade tensions have been airy manifest in parts of asia, so we take a moment as we come 2019 -- what 2 progress was achieved? more on that next. this is bloomberg. ♪

♪ good morning, everyone. francine, tomnfo keene in new york. viviana: china is on a mission

to create a "aircraft carrier sized investment bank," opening up its financial industry and wants to beef up its players to compete with wall street. china does not have much of an international presence. have as many assets as goldman sachs. germany and russia expect the pipeline to be delayed until next year because of u.s. sanctions on the project. 7% still needs to be laid. hong kong residents are looking for apartments in other parts of protests as intense could drag on into next year. among the most popular destinations, australia and canada. global news 24 hours a day, on air and @quicktake on twitter,

powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. anna: thank you. dating back more than seven decades, as shinzo abe and moon jae-in met in a trilateral summit in china. china's colonial rule continues to affect the relationships of neighbors locked in a trade war of their own. bya vicious cycle created measures and countermeasures would not be ideal for either country. theapan has requested related trade authorities to hold talks but negotiations have not made progress over three years, so we have lost trust. >> the japanese government decided to remove korea from its so-called white list of countries. it is a selfish, destructive act

that will cripple the supply chain and wreak havoc on the global economy. it is sure to draw condemnation from the international community. has unilaterally committed to acts that violate the agreement, breaking international laws that have become the basic for normalizing international relations. >> if japan chooses the path of dialogue and cooperation, we will join hands and strive to create an east asia that engages in fair trade and cooperation. >> south korea is an important neighbor. keep thee country to promises between the two under international law. anna: the trade spat has far-reaching implications. japan and korea account for 60% of the world memory chip supply, and then there is the issue of north korea.

tensions put a key security pact at risk. joining us on the phone is sharon chen. good to have you with us. did we get any progress on this key tension between japan and south korea? this has been decades in the making. sharon: not any visible progress. at least it didn't get worse. moon sat downand to have the bilateral for 15 minutes more than scheduled, which japan touted as a record. it is a tense moment but they are both ready to talk. they do not want things to escalate. japan's foreign ministry spokesman characterize the atmosphere as tense but not unfriendly or harsh. they discussed north korea,

fukushima, and the supreme court ruling about the so-called fourth neighbor. issues, discuss thorny but they did publicly review resolutions on that front. anna: i suppose that is the glass half full take away from this. what expectation was there that anything would change as a result of the meeting? sharon: i don't think there was any expectation there would be there wasrogress, but a question about whether the meeting would happen or not. the timing was only made public today and we were told it was still unscheduled. andfact that it happened that it was as long as it did, and that both sides have come away with the same message, that

suggests it was as expected. , these christmas eve images are absolutely extraordinary. harkening back to the colonization of south korea by japan from 1910 to 1945. sharon chen, what part does china play? how does china fit into this ballet? sharon: there was a lot of talk about whether china would play the role of mediator. the fact that they are meeting at the trilateral, it is a convenient time to meet. most of the trilateral's, they have not made specific comments. tom: your wonderful article with isabel reynolds, you cut to the heart of it which is that these leaders are playing with domestic politics and in the site -- case of south korea,

becoming election. areundingly, their publics reticent to have better relations. how difficult is it for these leaders with their electorates? sharon: clearly, that is your , even here,oncern the foreign ministers met and pushed back against each other, and both foreign ministry's made sure they put up messages to say they were not caving on any front. domestic politics is at the forefront. tom: why isn't president xi there? sharon: the meeting was hosted by the premier. president xi met with president moon and president abe in beijing before they got here. anna: thank you very much for the update, beijing bureau chief

with the deck -- details about meeting, little progress being made and anticipated. daniel morris is still with us. interesting to think about this with an eye on trade. it has been expressed through trade tensions. i remember looking at charts of flows of tourists dropping off in these nations, and that we typically see in asia. what kind of evidence do we see of this emerging market within asia, trade tension having an effect on global trade flow? daniel: the first point is, global trade volumes have fallen since october last year and the assumption has been, that is ,rump's trade war behind this but that is not necessarily the case. volumes have fallen not between the u.s. and china, but in the

rest of emerging markets. there are consequences of these poor relations between south korea and japan. there is the domestic slowdown in china that is gripping trade within the asia region. this is important because a lot of us are assuming with a phase one trade deal, trade gets better and all the problems are behind us. bank goes back in japan to 1867 and was the original financers of japan in 1907. a mores a change in mercantilist world? these nations are buttressed up against trump trade policies. daniel: that is one of the concerns we need to have going into next year as we think about global risk, with the phase one deal. usmca,e passage of the and the japan trade accord, so from trump's point of view,

these are victories and he could conclude his strategy of using tariffs to force concessions is effective, and let's do more of that. the assumption is that the trade dissipate,aced will is unlikely. morris and sharon chen. michael holland will join us on the equity markets, this extraordinary bull market. this is bloomberg. ♪

♪ i am anna edwards in london with tom keene in new

york. now to some breaking news out from the middle east. saudi arabia and kuwait signed a pact on the so-called neutral zone, the strip of land between the countries and the oil fields that can produce as much as 500,000 barrels a year. daniel morris still with us. let me ask about these developments. between the two countries can produce 500,000 barrels a day, so how material if they agree to produce more? >> by far, the most important take away, this does not mean 500,000 barrels the minute it comes back own. they are both members of opec and reasonably good adherence. it is not a big flood of oil. the second take away his we saw

a series of attacks on saudi, culminating in a fantastic one in september, the biggest disruption to the oil supply the world has ever seen. that focus has been on resolving this conflict. diplomaticeen a mission to resolve it. the bombing made the saudis thank, we need to get it online. anna: where is your oil -- expectation of where oil prices had next? a bigjors still make percentages of these markets and that could have a bearing on corporate profitability or stocks as a whole. daniel: if you are thinking about your outlook for equities over next year and look at the range of provisions, there is some momentum. you have not seen a lot in the u.s. and europe and it has been

negative in the u.k. and that is because of the energy sector. if we start to get stabilization in oil prices, that would suggest that drag would fade away and you would see positive momentum in the earnings outlook. if this plays out that way, it is a bullish factor for equity returns. tom: there has been a lot of talk about american fracking and it is not doing well whether it is bonds, finance, or the production of oil. i thought we were independent and everything was great. am i mistaken? stuart: not at all. there is absolutely no question of what has happened in the u.s. energy sector in the last decade, nothing short of miraculous. we have gone from a nation that on heavily dependent extremely unstable parts of the world, and today, they are pretty much on the cusp of that country being a net energy

exporter, which is phenomenal. to do that and that period of time, if you are an equity or debt investor, last year hasn't been great, but i would take a bigger picture for the u.s. economy as a hold -- as a whole, this is phenomenal. tom: the oil price for saudi arabia is different from the oil price in america. do you have a blended number of where people would like the price to be? stuart: there is no such thing as a blended number. if you are sitting in saudi arabia you are looking for $60 to $70 a barrel, but you can more or less carry-on along those lines. goshale, you may be able to as low as $20 or $30 a barrel and some may need $60 or $70 a barrel.

what would be the banks' attitude going into 2021? we will see. anna: talking about u.s. shale, i wanted to show this chart. over the last decade we have seen big increases in production that haven't resulted in an desk in a higher oil price. -- in a higher oil price. the s&p 500 has gone its own way and oil stocks within the s&p 500 energy sector has been weighed down by the oil crisis. this has not helped them propping up the price. stuart: the yield on equities is not bad. let's not draw the parallel between saudi aramco, but you have decent yields on stocks. this is not a buy recommendation, but just to point that out. in an environment where zero and

negative interest rates are the norm, 5% and 6% is not bad. tom: stuart wallace, thank you so much. daniel morris of bnp paribas will continue with us, as we look at the united kingdom. coming up on britain, it is a new sunrise, a new morning, a -- go gorge eos city rgeosity. ♪

♪ viviana: you are watching bloomberg "surveillance." giving is good business. located around the world relate to public health and economic development. here is a look at corporate philanthropy and 2020 trends. >> it says katie on the shoe -- haiti on the shoe. viviana: the shoe is made in haiti and 100% of the profits are being donated to restore the nation. >> we are so excited to be able to create jobs and keep the

haitian people working with money in their pockets. many people are unemployed in haiti. pairna: buy a pair, give a is the strategy of companies including warby parker and tom's. donated over 90 million pairs of shoes. business philanthropy is not just good public relations. >> it is aligned with a company's well-being and aligned with shareholder interests, and because of that, that philanthropic effort can be considered an investment, not a cost. viviana: after the public backlash from the global financial rises, wall street banks debuted initiatives highlighting not just how much they give, but the causes and communities where they invest. goldman sachs has invested in its 10,000 initiative, 10,000 small businesses and 10,000 women.

the latter aims to close the wage gap by providing access to capital and business education of underserved women in 56 countries. return on community, a business imperative is how jp morgan describes its philanthropy. advancing cities is a $500 million initiative, focusing on data and small businesses. after founding companies and making billions, bill gates, lee cushing, and -- created foundation, focused on public health, education, and the environment. as for 2020 -- >> it will be a pivotal year for countries on environmental and social issues. howana: pivotal, because of countries react to galvanizing issues can be a risk or

opportunity for companies to gain a business advantage. that is your bloomberg business flash. tom: thank you so much. right now with us, daniel morris. we have lots to talk about, here with emp pere riba. -- bnp paribas. your thoughts on the huge triumph of boris johnson we saw? daniel: we did expect you would see a tory victory. the question was around how big that would be and that was a positive surprise. short-liveds how that bounce in sterling turned out to be. we anticipated in the summer that you would have the discussion coming back into the market whether there would be an extension of negotiations and what the form of the agreement would be. that has been moved to the end of december instead of the summer so we have seen week is in sterling, which suggests 2020

will be a replay for sterling, as negotiations go one way or the other. the implications for the softness and hardness around the deal will play threw two u.k. equities. wea: brinkmanship is what will all focus on, because boris johnson has said he will not extend past the transition and some say this is just brinkmanship with the e.u. and he could write more legislation saying he will extend. we will be hanging on his every word, earlier than anticipated. daniel: i guess there was a naive hope that we could put a bed of this aside, but that is evidently not the strategy. -- put a bit of this aside, but that is evidently not the strategy. what is the latest out of the e.u. and u.k. government about

the tenor of the deal? that is what we will follow. anna: where does the pound look? down below 1.30, had a dreadful week last week and the market decided to focus on the end of 2020 question. with that in mind, do you still stay away from sterling or do you see enough certainty to buy into u.k. assets? daniel: it is challenging to have a long-term view on sterling. the degree of uncertainty has not diminished much. we have had a few things taken off the table in terms of we know who the government is and we know we have a date on january 31. that turns out to be a small percentage and there is more volatility in sterling and a range that we have not seen since 2016. congratulations and a great

call on economic growth by bnp paribas. coming up in our next our, michael holland will join us -- in our next hour, michael holland will join us. this is the undercurrent story of the holiday season. america has to confront what we have brought with shipping, day, two day, the endless cardboard boxes. y with a blistering research note on what has happened with america and that shipping. this is bloomberg. ♪

[ dramatic music ] this holiday... ahhhhh!!! -ahhhhh!!! a distant friend returns... elliott. you came back! and while lots of things have changed... wooooah! -woah! it's called the internet. some things haven't.

get ready for a reunion 3 million light years in the making. woohoo! -yeah! ♪ tom: this morning, 'tis the season.

all the markets up, you are not. you sold in may and went away, bah humbug. is an opportunity for japan and south korea. and tokyo meet. boeing manages the message forward. this is bloomberg "surveillance," from our world headquarters in new york and london. anna edwards set up for boxing day. what is boxing day? anna: there are so many theories. it is nothing to do with axing. -- boxing. it is to do with large households boxing up gifts for servants. that is not done a lot anymore. tom: the queen with a terse message for the holiday season --

anna: come together. of japanthe leaders and south korea holding their first formal meeting in 15 months to end a long-standing historical to butte. dispute.torical saudi arabia and kuwait signing a pack on their neutral zone which paves the way to restart oil production in the border region that can produce as much as 500,000 barrels a day. for four years, it has been shut over a dispute. 2019 was a good year for the super rich. worldchest man in the adding almost $17 billion to his overh, jack ma growing by $11 billion. ceo growing but jeff

bezos lost. global news 24 hours a day, on air and @quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. tom: how about a data check? there is not that much going on, closing early today. upures up two, dow futures 19. on with a little bit of news a saudi-kuwait geography. anna: things aren't moving far, 1/10 of a percent on the stoxx 600 in asia. some of the markets in europe did not start trading today. germany is closed. tom: i want to show you a chart. here is the depression, and it is on a log basis so percentage change matters. there is no equivalency.

2007 financial crisis is barely a blip compared to 1929. versusuarial assumption your 2019 double digit reality. about theying pullback december 24 last year. i have a chart that shows the chicago fed national activity index moving away from recessionary tend -- territory. recessionary fears, they are so 2019. should we leave those as the year turns? tom: let's start by finishing strong. we do that with michael holland of holland and company. let's go to the ibbotson study. cash, ie dow, and go to have got to go to cash.

here is q4 last year. i am afraid. how do you stay in the market? michael: you step back as always. a year ago, december was the since 1931.er a year ago, it is hard to remember the comments being made at the end of the year in terms of the world coming to an end. it is just the opposite. the federal reserve has had a lot to do with it, but business has been ok around the world. ite a deep breath, say, is really that bad a year ago? it was not. tom: we can do this on the bloomberg terminal. let's go back to 1931 when holland was a runner on the street, a young runner. you have the depression, a bounce up, and a malaise into

the 1940's. how do you synthesize coming off of this, the next year? if you have a double digit a 29%, how do you prepare yourself mentally? michael: the last 25 years, there have been six years like the one we had. 25% to 30% going into year end. the six times it has happened, over 80% of the time it has been up over 80%. is, we have things in motion, newton's law, and will tend to stay in motion. anna: we are looking at decade beating returns in many asset classes and 2019. as we roll into a new decade,

where are we going to be looking for those really strong returns? michael: huge returns come from things that are way down. we talk about december a year ago, stocks were way down. if you look at asset classes, even gold has had a double digit year. having looked at different commodities, different markets, the most interesting place for me would be in energy. an article over the weekend, peter lynch from fidelity years ago, put it in that category. it is a good idea to look into energy. anna: this time last year, we saw a wobble on u.s. equity markets, down more than 2%. then they bounced the day after christmas. does it matter that we sit here with a very different market?

have we answered all those questions around trade and the fed since this time last year? michael: of course not. we remind ourselves that a lot of these things are still in play. thing, one oftant the most important things is the federal reserve followed by central banks that have been remarkably accommodating, led by the fed the fed has been worried about liquidity. we have more liquidity coming into the u.s. market then at the time of original quantitative easing. we had the fed end up the year with probably the largest balance sheet it has ever had. , how do i sell my amazon and go into chevron? if the decision is chevron or amazon, i don't think people can mentally partition that. michael: you are too smart to

think about doing that, because you would sell the little bit of amazon and buy a little bit of chevron. graham dodd beyond and coddle? michael: that is an important question. quick answer would be, pretty much yes. benchmarks that we learned in that the risk re-rates of return, we have trillions of dollars of debt around the world and trading at negative interest rates. the risks -- i don't want to get too far into the weeds. nobody is watching. tom: they are all watching. michael: three people are watching. i want to interview you and anna. of allto hear the best year. tom: we would have some joyous

advice. anna killed it for brexit. michael: you are 301 k is now a 501 k. tom: i am in the triple all-cash fund. anna: i will let michael carreon. i will put my feet up. michael holland, thank you much for joining us. he stays with us. boeing ousts the ceo. david calhoun faces the daunting the 737 masking and its reputation. how much will airbus gain on its rival? this is bloomberg. ♪

♪ viviana: this is bloomberg "surveillance." reporting practices prompting sec to put bmw under their microscope. chryslerator find fiat $40 million over similar problems. the german car maker is in a tight race with daimler over the u.s. luxury market. tesla shares hitting a record high. the automaker has secured $1.4 billion in financing for its shanghai factory. the deal with chinese banks comes as it prepares to begin deliveries of model three sedans. tesla hopes it will help them build on recent momentum in china. that is your bloomberg business flash. anna: boeing has ousted its ceo. the embattled lane maker named

david calhoun -- plane maker named david how could -- david calhoun. this is the latest twist in the turmoil surrounding the grounded 737 max. johnson,s is guy follower of the aviation sector. is this a change that following need? -- boeing needs? guy: possibly. shifting ceos does not guarantee success when it comes to getting the 737 max back in the air, or in getting a better relationship with the faa, however it does provide a fresh face for those conversations to move on a little bit better. the faa relationship is critical. addressed thisrg

problem from the wrong perspective. be able ton will step in and reset that elation ship. the engineering issues are still enormous. dennis was an engineer and dave is not an engineer, so the engineering processes still exist and they will continue at whatever pace. it is a and engineering problem and -- and engineering problem and relationship problem. tom: what is the feasibility that southwest airlines will become an airbus airline? is that culturally possible? guy: that would be a huge blow for boeing. southwest a huge operation for the 737s and has done for a long time. its business model is largely based on the 737. the engineering behind that, simplicity of having one type of aircraft is enormous.

southwest would be a huge blow, but other airlines potentially could make that switch. at the paris show, the big surprise for boeing was that it managed to secure a substantial order from iag which owns british airways and iberia. surprising, as this continues to go along, that airbus tries to reverse these orders, particularly the ones further down the pipeline and therefore there is more availability to make that switch. anna: the extent to which airbus is able to capitalize on the woes of bowing -- boeing could -- capacityes constraints for airbus. guy: airbus is competing

strongly in a number of different categories and at the moment, boeing faces difficult choices. it has to get the 737 back in the air and make a decision on replacements everyone is talking about. airbus is selling strongly the a320 one, the lot -- long-range version that overlaps with the 757. dave calhoun will have to make that decision. tom: guy johnson, greatly appreciated. mr. johnson in london. michael holland watching all of this. what do you do when a ceo exits? i have always enjoyed losing money when a ceo exits. is there more turmoil than when the public thinks -- then the public thinks? michael: especially in a place

like boeing. tom: do you own it now? michael: i have in the past, but thankfully i do not. tom: do you want to make some news? michael: this is a brilliant choice. i don't know if it will be enough for the naysayers. i think the future for him is to do the faa thing first and the other stuff he has to do. he is a very smart guy. just look at his resume. he has history of success wherever he goes. tom: including generous electric. his jobtalk tim cook, is secure into the new year. anna: thanks very much. a quick briefing on the markets that are open and closed. .urope has been flat

italy shutitzerland, for christmas eve and the markets that are open will shut early, as will the united states. tomorrow is christmas day with most markets closed. on u.s. will be open december 26 but most others will not. as we, business as usual had to the end of the year. this is bloomberg. ♪

♪ "surveillance," anna edwards in london, tom keene in new york. we are thrilled to bring you michael holland to talk about this great will market. if the underpinning is use of cash, how do you respond when you see blue-chip stocks with dramatically less shares over the past five to 10 years? they are making intelligent, rational decisions that the stock is too low and they do not have a lot of other things they have confidence in investing in. of course they should do this. andtimes it is a dumb idea, oftentimes history is great in terms of their timing. day, iy back, the other looked at back, joseph schlitz and company.

how nifty six or nifty nine are we? "madmen"?iving michael: it is the nifty 20. tom: maybe it is nifty six. michael: i was born into the investment business in the midst of a small company that is now jp morgan. the reality is, you can learn a lot from history, particularly at that time when things got crazy priced and others were not crazy priced. are aality is that there number of companies even after today, jp morgan and intel are still trading at less than 13 times earnings but yielding more than 2%. iona amazon and google. tom: did you buy apple? michael: i own it.

i don't sell it yet, only because the businesses are so good. they are replacing price. at the end of the day, i have cash that i continue to build as the market goes up because there well, day when cash will make sense. anna: away from the crazy price, are you concerned in the tech sector about regulation in 2020? will this be a year where the has?t of regulation michael: that is the number one challenge. the monoliths will have people come after them, politicians will have fun with this, and the answer to your question is yes. at the end of the day, they will still be ok because they usually screw it up. anna: are there other areas of tech where you worry about their of entering?

some names have strong barriers and others less so. certain tech companies attract competition at this point. what are your thoughts? michael: you put your finger on the long time tenet of the successful investor. warren buffett talks about having a moat around his companies where it is difficult to get into the business. who is going to compete with amazon? there is a reason for these things to be trading at high prices. there is a reason to have a higher price company with a moat around it. publicw do we get the back to the joy of owning individual stocks and the time of louis rick kaiser? fun ofwe get to the making and losing money in the stock architect? michael: i don't -- stock market. michael: i don't think it is

coming back. if you want to buy energy, you can buy an etf that has the best energy companies and you don't have to decide which is a better investment. you don't have to do that, because you can be in the right church, in the wrong you -- pew. games, itdays, those is like professional hockey today. tom: michael holland with us, after the bruins beat the capitals last night, the only reason he showed up. in washington, the road to 2020, the theme for next year. this is bloomberg. ♪

♪ i am anna edwards in london with tom keene in new york. let's get the bloomberg first word news. viviana: in china, the

government is trying to set the economy up for a strong start to 2020, watching a multi prong to push from easier policy to freer trade. they are signaling further reserve cuts are on the way. the reduction will free up funds to lend to the private sector. germany expects the north stream pipeline to be delayed but should be completed next year. costs arehiving -- rising due to tariffs. in hong kong, residents are looking for other parts of the world. real estate brokers have seen a surge in australia and canada. global news 24 hours a day, on air and @quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. tom: thank you so much.

i want to bring up a morning must read as we go to washington and emily wilkins. this is christmas eve, let's go impeachment free. iowa, it's complicated. february 3 is the date, a dozen candidates considered in the viable category. the winner could easily win with less than 25% of the votes. that could come out to be about 50,000 people. you probably want to keep an ion how much time the top candidates get to spend in the state and how big their crowds are. votersuesday: by then, may not recall who won iowa. iowael bloomberg not in but super tuesday, march 3. he is the founder of bloomberg lp and this television operation.

emily wilkins joins us. how riveted is your washington on iowa? emily: a lot of people are paying attention. it is the first caucus an incredibly important. you have seen the candidates respond to that. you have seen people spend a lot of time in iowa and a lot of campaigns are helping they can break into first place and to the clear favorite if they perform well. forcesn't the immovable that president biden has done better than good in the polls? emily: biden has the lead, but in iowa things have gotten tight. the southat one point bend mayor was leading in the iowa polls. i think that has changed, but it is still a point where everyone is a couple percentage points away from each other as far as the top four and still potential

for anyone to pull it off. anna: i know tom wanted to be impeachment free, but just an update if you wouldn't mind, on the progress from the house into the senate. any news on how quickly the democrats will allow it to move to the senate or whether the senate has leverage to get a hold of these quickly? emily: it is still unclear. mitch mcconnell and chuck schumer need to decide on a process how they will handle the articles of impeachment and the trial. they met and were unable to come to an agreement. speaker nancy pelosi said she will not send the articles to the senate until they know what the process is. you are seeing a stalemate from all sides. everyone has left capital for the holiday season and will not be back until january 6, so they have time to figure this out before you see expected delay in

the process. anna: any sense of how trump's base views the impeachment process? emily: from this entire process, we have seen the country split pretty much 50/50. trump supporters have stuck by him all the way. in the house vote, no members of the republican party voted for the articles of impeachment. we seem to be hearing similar things from republicans in the senate, they plan to support president trump. tom: emily wilkins, thank you so much. we thank all of our washing team, particularly kevin -- washington team, particularly kevin cirilli. michael holland has seen 42 presidents. how do you synthesize election year? mother, ofo nuts, my

linking the election to equity markets. i never bought it. should i? michael: no. to talk about the myth of simultaneity with residents -- presidents. last two ord to the three previous presidents, but in terms of disruption for trump , you could end up with the market having a reaction. overall, it doesn't matter. number two, i am not an employee of bloomberg so i can say this. all of the democrats that emily was talking about a second ago would probably not be good for the market. having said that, you end up with probably none of them getting elected right now. the market is saying two things

and has for the last two years. number one is that he won't be impeached. the house will do what it does because it is democrat, but the market pays no attention whatsoever. you go to next year, the election, if michael bloomberg gets a chance to run against trump, i believe and some of the market believes he would have a chance. if michael bloomberg got elected , that could have a beneficial effect on the market. how is that. tom: keep this up. my badge will not work by the time we leave for christmas eve. mr. bloomberg the owner of bloomberg lp and the tv and radio station as well. you are a blue-chip guy. when can you migrate to mid-caps? is there any place in your

heart? michael: i have owned enough of those. i know you want to get off the presidential thing -- tom: he figured that out. michael: i have known michael bloomberg since he started -- tom: you are going to keep coming. michael: i am not an employee of bloomberg. i have known him since he was running the equity at salomon brothers and i am a beneficiary of what he has done in new york. he has a shot. i just want to put that on the record, if you got elected the market would go up. i will go back to mid-caps. tom: save me. michael: i don't see anything to do with that. they have moved up with the rest of the market. the nasdaq is up more than the dow, j.p.tocks on the morgan and intel, i don't have

to go into mid-caps. i can find valley with big caps and i love them if they perform. tom: mr. bloomberg is the founder of bloomberg lp and hopefully will let me be at this tv and radio station when i returned from my sabbatical. , talk about finishing strong for the year, michael holland and dana telsey. hourld talk to dana for an about bergdorf goodman. and notot walk by lighten your wallet. we do that next. ♪

♪ you are watching bloomberg "surveillance." we begin with an abrupt exit at nissan. as of the top executives joining electric car company nymex, another blow for the company struggling to recover from the chaos of carlos ghosn's arrest. causing the sec to put bmw under the microscope, months chrysler $40 fiat million over previous issues. bmw says it will fully cooperate with the investigation. that is the bloomberg business flash. tom: we are thrilled to finish

the year strong with michael holland and now with us, the most important woman in new york, dana telsey. she is here to tell us about the retail season. i was in your bergdorf the other day, best infrastructure project that was not laguardia. they opened the windows to let the light shine in. dana: we have a better season than last year, but there is really the haves and the have-nots. value and convenience matter, so walmart, target, t.j. maxx are what their winning -- are what are winning. tom: we could go through a three hour discussion and still have things to talk about. i have to go to your exceptionally important note on shipping. this is the year where the last mile is front and center. how much are shipping costs killing retail? dana: they are killing retail.

300 to have come down is basis points and now it buy online and pick up in-store. hopefully it adds an attachment sale to people walking in the door. anna: you focus on the u.s. market, but retailers around the world are wrestling with the same questions of competition online, how to solve the last mile, and delivery questions. our deliveries learning from each other -- are delivery companies learning from each other? dana: i think they are. they are learning how to include an incorporate buy online and pick up in-store. amazon is teaching everyone that speed matters. with innovation, speed, and data, --

anna: what will set the winners apart from the losers? you make a nice list of things to focus on, customer loyalty, digital enhancement, and china. which will be most important? dana: customer loyalty and digital enhancement are the most important in driving sales increases. we have been having expense issues and hopefully we see freight moderate, but we have tariffs. will consumers be able to accept low single-digit price increases? overseas if you are global, that is a big and if it. the 2020 olympics is good for nike. tom: it has been an ugly year. in my buying distressed value like macy's or an up in,? dana: single best ideas happen to be companies like target and

lululemon. i think brands. that makes the difference, because brands can control their own destiny. tom: i have to start my christmas shopping now. you told me last time we met that the over the knee boot in calfskin, $1950. that is the hot item? dana: you have apple earbuds working too. those are selling out at retailers like target. tom: did you lose your earbuds yet? everyone else has lost them at my house. this is a brilliant idea, innovation at apple. dana: it is innovation and selling out. at target, it sold out in two hours. tom: what is the best practice of target versus other big-box retailers? dana: the stores are glistening clean. tom: totally agree.

dana: the employees are rejuvenated and they are winning. i was in tax it and went into target and told the sales associate, your store is gleaming and they told me, you are making my day. tom: what is the prescription emptye dz's -- disease of stores? what is the prescription to solve what is literally a social try to g -- tragedy? dana: it is about service and service matters. we will see whether it is gyms, restaurants, or even schools, any way that can drive foot traffic helps keep people in that center longer. it is frankly getting more of their time and landlords want more consumers' time. you have to incorporate speed. tom: when do they lower the

rents? dana: it is happening now. at a lot of centers, the rents today are what they were five and 10 years ago. tom: what is your take on tiffany? dana: it is a win for tiffany and lvmh. tom: why? dana: look at the innovation it will bring tiffany, the ability to get collections out faster. stock,is is not an oil it is like a jewelry thing. what is selling at tiffany's? who do you see as the team getting the millennial right? dana: who is getting millennials right, lululemon, sephora. tom: what is it about makeup? can we rip up the script? can you explain the makeup boom? dana: it is not a boom now.

it is a skincare boom. we had a color cosmetics room going on two years ago and you can thank kim kardashian because contouring led to more tools. everyone can look young forever. looking good. gloss.me dana: you both look. -- look good. tom: thank you so much. this has been more than wonderful. anna, thank you so much. coming up, we consider the neutral territory between saudi arabia and kuwait. this is bloomberg. good morning. ♪

♪ i am anna edwards in london with tom keene in new york. morning, saudi arabia and kuwait signed a pact on the so-called neutral zone, the strip of land between the two countries that has oil

fields that can produce as much as 500,000 barrels a day. stuart wallace is with us. the significance of a neutral zone, they can produce that much but does not mean they will. stuart: right. several ways of thinking about a neutral zone. it brings on spare capacity, which clearly they need. number two, it produces the kind of oil that we are missing from places like iran and venezuela because of the sanctions, the very heavy oil that refineries need to keep operating. number three, the general sense that we are here to control the market, we have this initial capacity to do that. if we get attacked or if there are further problems with iran, we should be able to provide the market. anna: the saudis and opec jenna -- opec plus in general have

been saying they will cut back if the demand story dictates that move makes sense. does the market have faith in opec last? stuart: it has -- opec plus? stuart: it has faith in saudi arabia. stocksompensating -- compensating for that are raising production. diminishing amounts of faith as you go among the grouping. the goal for next year is about saying, we will take barrels off if we need to, but it is about being a reliable supply. attacks on saudi arabia have been about supplying -- challenging that. the invasion of kuwait and so on, it is about being reliable. anna: because of the amounts of oil they have on the sidelines being able to be released if

they need it, that is how they rode out that storm. stuart: they have spent decades building up stockpiles in the world in places like japan. the world assumed it was about building ties. reliability in supply, you can always trust that. as those attacks happen this year, it is increasingly evident those were the main mechanism to keep a lid on the crisis, very successfully. anna: in the aftermath, it seemed like the market would be disrupted and the price spike lasted no time. stuart: it is extraordinary. i have never seen the market come back from an attack of that magnitude so quickly, so it is a credit to saudi. you can say they are were so efficient they lost significant months of high oil prices. want what do the saudis

now? saudi aramco happened. how is that changing their thinking? stuart: we think the saudi oil price somewhere between 60 and 70 at the moment and it is about keeping things steady. you will not destroy demand or encourage extra just blot -- supply. the aramco ipo is thinking about supply and about being in a position to fund the dividends without having to go to the debt market. $66 athe oil price is barrel on brent. what do we expect into 2020? stuart: much of the same. if you asked a year ago what i expect a tax on tankers, processing plants, pipelines, obviously not.

the forecast must be coalescing around $60 to $70. anna: stuart wallace with us here. this christmas eve on set in london. , somearkets are shut closed already and some well close early. -- will close early. friday is business as usual for global markets as we head toward the end of the year. i wish you happy holidays. this is bloomberg. ♪

>> china's promises and promises.

the premier says china will open its financial health care and services sector before an investment, while warning of downward pressure on the economy. boeing's daunting task. hasming ceo david calhoun to get the 737 max back in the air, fix the relationship with regulators, and fix production issues. the stock market avoids the 15% selloff last december with the buy everything rally. now what? thisam to "daybreak" on tuesday, december 20 four. no doubt it will be light volume as we head into the short trading day in the u.s.. equity markets closing at 1:00, the bond markets closing at 2:00. easy because we have not seen the disastrous selloff that we saw last december. new highs in the s -- in the relatively stronger dollar. now for global exchange,